Up and down Wall Street investors have started looking for signs, trying to determine if the market’s sharp turn lower is simply consolidation, or the start of something more ominous.
Although an S&P pullback after the recent march higher was widely expected, the magnitude of the sell-off caught many investors by surprise.
By the end of the session, the Street had put in its worst day in nearly 3 months.
What should you make of the down move?
If Abigail Doolittle of Peak Theories is interpreting chart patterns correctly, there’s more selling to come.
Looking at the S&P, she’s concerned by Tuesday’s decline. “The S&P slipped back to the top of its 2-year trading range which was 1350- 1250,” she says. That suggests the market could again bounce between those two levels, making the path of least resistance lower. “It signals the S&P really could decline further."
Doolittle goes on to say that she believes that recent action in the Russell may be considered a leading indicator -- and for the past few weeks the Russell has been challenged. “It looks like a bearish signal of what’s to come.”